Armature deforms Mesh horribly
This is because of vertex groups and weight painting. I just got through this myself. 
if you assign and select a single vertex group in edit mode and then switch to weight painting mode you can change how the bones affect the model.

You can find vertex groups in the data tab of the properties panel.
in the vertex group section you can select a number of vertices and create a group. you can then name each group you create. for example 

You could select all the vertices in the head of the mesh and create a group and name that group head. from here you can now weight paint your head vertex group.

To get to weight painting, make sure you have the vertex group selected in edit mode. click the menu where you choose edit/object mode and choose weight paint. this will allow you to paint on the influence the bone will have on the mesh.